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Friday, June 6, 2008

A WWDC Checklist

As usual, rumors are flying on what exactly Jobs will reveal at the latest keynote at WWDC. With the stock trading around 190, I think it would be useful to set out a checklist of what Apple absolutely NEEDS to announce and what would simply be a bonus for investors. A miss on these expectations might not impact the long-term performance of Apple, but I think you could see a significant pullback if the market is disappointed.

The Minimum.

FeaturesObviously a 3G version of the iPhone is a lock, but beyond that the specs absolutely matter. An upgrade to the camera to 3 megapixels and video camera functionality plus GPS is a baseline for the new specs. Miss on either of those specs and the 2nd half projections will be risky.

Pricing.The rumors of subsidies have become so strong that this is now in the minimum camp. Apple might not even announce pricing outside the US, but the minimum price for an iPhone has to move below $300...and even $299 might not be enough to satisfy the market. Pricing outside the US might not even be announce by Apple as this may be completely up to the operators.

Timing.Commercial availability in the US by the end of June with rapid successive launches in Europe by the end of July. Asia can wait until the fall.

I see the above data points as the absolute minimum that Apple needs to announce to keep the stock from cratering following WWDC. Luckily, I do believe they will hit all of those marks.

Bonuses

Apple doesnt need to hit all of these, but likely they need a few to satisfy both the market and consumers.

The latest rumor that is gaining steam is one of Apple launching multiple iPhone models on Monday. This nicely dovetails the various sources saying that the new iPhone will both be thicker (3G, larger capacity) and thinner (new EDGE version). If true, this would be a clear indication that Apple is looking to grab substantial share in the near-term.

There are rumors of support for iChat, multiple colors and a bump in the maximum capacity to 32GB. All would be nice to have, but unlikely to be a real sales drivers.

Perhaps the most interesting announcements will revolve around the new Apple store. How compelling will the new apps be? This will be the hardest to judge, but if Apple pulls this off, they will be able to generate a whole new revenue stream for many years to come.

Longshots

One analyst is predicting a 50% chance of an Apple MID (4-7" screen) being announced. While I think these devices are in development, I think that this fall would be the natural time for such an announcement. Apple's reference to the Touch as a WiFi enabled mobile computing platform basically revealed their future product direction. The iPod is going upmarket....but I very much doubt it would be today.

Likewise revised Macs/Macbooks are more likely to be introduced later this summer.

The key to Apple's trading today is going to lie in the pricing and timing. A $199 pricepoint with availability next Tuesday in the US and in Europe by the end of June and I think we should see a nice multiweek run. The 10 million unit estimates would all be getting revised upwards as analysts realized that Apple was serious about grabbing share.